Cerberus Capital Management on Monday named former Home Depot Inc. Chief Executive Robert Nardelli as chairman and chief executive of Chrysler LLC in an executive shake-up just after the private equity firm completed a deal to acquire the struggling No. 3 U.S. automaker.

Chrysler's current chief executive, Tom LaSorda, will stay on as president and vice-chairman and continue to lead ongoing talks with the United Auto Workers union as the automaker's No. 2 executive and a consultant to Cerberus.

In a further shake-up, Chrysler's current chief operating officer, Eric Ridenour, will leave and his post responsible for production and product planning will not be filled.

Chrysler has many deeply talented and dedicated people, and I am confident that together we can continue the momentum of Chrysler's recovery and return this great American icon to a path for global growth and competitiveness, Nardelli said in a statement.

The leadership reshuffle comes after Cerberus closed its $7.4-billion acquisition of an 80.1-percent stake in Chrysler from former parent Daimler on Friday and underscored both the speed at which the private equity firm was moving to rescue the loss-making automaker and the risks it faces.

The changes come at a sensitive time for Chrysler, which is locked in negotiations with the UAW aimed at reducing its hourly labor costs to make it competitive with Japanese rivals led by Toyota Motor Corp.

In Nardelli, Chrysler is getting a former senior General Electric Co. executive, who was both credited with overhauling purchasing and technology systems at Home Depot and widely criticized for pay and severance packages seen as excessive.

This is an interesting choice, and I'm somewhat perplexed by it, said Erich Merkle, an auto industry analyst with IRN Inc. There are still things that Chrysler needs long term and I'm not sure Nardelli can provide them.

In a sign of the stress on the U.S. auto industry, Nardelli becomes the second outsider named to lead a U.S. automaker in the past year after Ford Motor Co. hired Alan Mulally as chief executive from Boeing Co.

LaSorda had been widely expected to stay on as Chrysler's chief executive through negotiations on replacing a four-year deal on wages and benefits for UAW-represented workers that expires on September 14.

Nardelli received a severance package valued at $210 million, including a $20 million cash payment, when he left Home Depot in January.

He has agreed to take the senior post at Chrysler for a $1 per year salary with further compensation tied to the success of the automaker's turnaround, according to a person with knowledge of the situation.

UAW TALKS IN FOCUS

The details of the remainder of Nardelli's compensation package at Chrysler were not immediately available, but could become a question in talks with the UAW.

The UAW endorsed the Cerberus deal to buy Chrysler, which was delayed after bankers were forced to postpone a $12 billion syndicated loan to finance the transaction.

But UAW president Ron Gettelfinger has indicated that executive compensation is one issue for the union as it faces calls to surrender hard-won pay and benefits for the more than 180,000 workers it represents.

A UAW spokesman could not be immediately reached for comment. The union was consulted ahead of the Nardelli appointment, the person familiar with the matter said.

Chrysler lost $680 million last year and has said it will remain unprofitable until 2008 as it restructures by cutting 13,000 job cuts and closing an assembly plant dedicated to the slow-selling Dodge Durango sport utility vehicle.

LaSorda said last year that he accepted responsibility for Chrysler's financial problems after inventory piled up, consumers turned away from its truck-based vehicle line-up and dealers complained they were being forced to take vehicles they could not sell.

Cerberus said it asked LaSorda to serve as vice-chairman of an affiliate of the firm that manages and provides advisory services for companies it has acquired, which includes other auto-related companies such as GMAC.

Cerberus had offered Wolfgang Bernhard the position of Chrysler chairman, but the veteran executive who had been an advisor during the acquisition was unable to accept the job for personal reasons, the person familiar with the matter said.

Under Cerberus, many observers and Chrysler executives had expected Bernhard to end up in a senior role at the newly private automaker, especially after he toured Chrysler design studios and had been seen as preparing for negotiations.

Daimler retains a 19.9-percent interest in Chrysler and has agreed to cooperate with its former U.S. unit in sourcing and other areas.

But as the first private equity firm to acquire a major U.S. automaker, Cerberus has been widely expected to shake up established practices in Detroit.

Even before the Cerberus deal was complete, Chrysler was considering whether it could leapfrog Ford and General Motors Corp with a deal to cut retiree health care costs by establishing a union-aligned trust fund, according to a person familiar with the matter.

Cerberus is also expected to force a review of Chrysler's product development plans for less fuel-efficient rear-wheel drive cars, people familiar with that process have said.

Chrysler's U.S. sales were down 2 percent through July and the automaker has been forced to rely on industry-leading incentive ahead of the launch of key new products, including new minivans later this year and new pickup trucks next year.

They've got some momentum on the product side, but my concern is what happens four to five years from now, said Merkle. When you get these kinds of management upheavals, what happens to product development?

Chrysler